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Do Taxes On Soda And Sugary Drinks Work? Scanner Data Evidence From Berkeley And Washington State

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  • Christian Rojas
  • Emily Wang

Abstract

We study two beverage taxes: the SSB tax of 1¢/oz in the city of Berkeley (in effect since 2015) and the temporary 2010 soda tax of 0.166¢/oz in Washington State. Using detailed scanner data, we find that prices in Washington reacted sharply and promptly (often by a larger magnitude than the tax), whereas retail prices in Berkeley reacted marginally (by less than 30% the magnitude of the tax). Further, we find a 5% volume reduction in Washington but fail to detect an effect in Berkeley. We discuss the possible causes for the discrepancy in effectiveness, in particular cross‐border shopping. (JEL H22, L66, I18)

Suggested Citation

  • Christian Rojas & Emily Wang, 2021. "Do Taxes On Soda And Sugary Drinks Work? Scanner Data Evidence From Berkeley And Washington State," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 95-118, January.
    • Handle: RePEc:bla:ecinqu:v:59:y:2021:i:1:p:95-118
    DOI: 10.1111/ecin.12957
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    1. Zhai, Tianchang & Li, Lei & Wang, Jingjing & Si, Wei, 2022. "Will the consumption tax on sugar-sweetened beverages help promote healthy beverage consumption? Evidence from urban China," China Economic Review, Elsevier, vol. 73(C).
    2. Friberg, Richard & Halseth, Emil M. Strøm & Frode, Steen & Ulsaker, Simen A., 2022. "The effect of cross-border shopping on commodity tax revenue: Results from a natural experiment," Discussion Paper Series in Economics 9/2022, Norwegian School of Economics, Department of Economics.
    3. Goncalves, Judite & Merenda, Roxanne & Pereira dos Santos, João, 2023. "Not So Sweet: Impacts of a Soda Tax on Producers," IZA Discussion Papers 15968, Institute of Labor Economics (IZA).
    4. Tiboldo, G. & Castellari, E. & Moro, D., 2024. "The distributional implications of health taxes: A case study on the Italian sugar tax," Food Policy, Elsevier, vol. 126(C).
    5. Judite Gonçalves & Roxanne Merenda & João Pereira dos Santos, 2024. "Not so sweet: impacts of a soda tax on producers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(5), pages 1388-1412, October.
    6. John Cawley & David Frisvold & David Jones & Chelsea Lensing, 2021. "The Pass‐Through of a Tax on Sugar‐Sweetened Beverages in Boulder, Colorado," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 987-1005, May.
    7. Aaron Adalja & Jūra Liaukonytė & Emily Wang & Xinrong Zhu, 2023. "GMO and Non-GMO Labeling Effects: Evidence from a Quasi-Natural Experiment," Marketing Science, INFORMS, vol. 42(2), pages 233-250, March.
    8. Pourya Valizadeh & Shu Wen Ng, 2021. "Would A National Sugar‐Sweetened Beverage Tax in the United States Be Well Targeted?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 961-986, May.
    9. Goncalves, Judite & Merenda, Roxanne & dos Santos, João Pereira, 2022. "Not so sweet: The impact of the Portuguese soda tax on producers," Ruhr Economic Papers 938, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. He, Xiaoyang & Balagtas, Joseph V., 2022. "Spatial retail competition reduces the effects of soda taxes on price and quantity: Evidence from the Philadelphia Beverage Tax," Food Policy, Elsevier, vol. 112(C).
    11. Andrew T. Ching & Daniel Goetz, 2024. "Consumption Responses to an Unpopular Policy: Evidence from a Short-Lived Soda Tax," Marketing Science, INFORMS, vol. 43(6), pages 1204-1225, November.
    12. Zhen, Chen & Chen, Yu & Lin, Biing-Hwan & Karns, Shawn & Mancino, Lisa & Ver Ploeg, Michele, 2021. "Do Obese and Nonobese Consumers Respond Differently to Price Changes? Implications of Preference Heterogeneity for Using Food Taxes and Subsidies to Reduce Obesity," MPRA Paper 112697, University Library of Munich, Germany.
    13. Zhang, Qi & McCluskey, Jill J. & Gallardo, R. Karina & Brady, Michael P., 2021. "Avoidance behaviors circumventing the sugar-sweetened beverages tax," Food Policy, Elsevier, vol. 105(C).
    14. Chen Zhen & Yu Chen & Biing‐Hwan Lin & Shawn Karns & Lisa Mancino & Michele Ver Ploeg, 2024. "Do obese and nonobese consumers respond differently to price changes? Implications of preference heterogeneity for obesity‐oriented food taxes and subsidies," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(3), pages 1058-1088, May.

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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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